Living Benefits - Life Insurance You Don’t Have to Die to Use

What are living benefits or accelerated benefit riders?  

All life insurance companies have policies that pay out a death benefit if the covered individual passes away. Let's say you have a twenty-year term policy for $500,000. Three years into the policy, you pass away from a heart attack. Your beneficiary makes a claim, and the insurance company pays your beneficiaries the $500,000 death benefit.  

This is how LIFE INSURANCE works.

But what happens if you don't die? What happens if you have a heart attack, stroke, or invasive cancer...AND LIVE?!?!

Now let's say you have that same life insurance policy for $500,000. Three years into the policy, you have a heart attack and LIVE!! Does the life insurance policy pay out the $500,000 policy? No, because you did not pass away. Unless you have a policy with Living Benefits!

You are reading that correctly!! Policies that have Living Benefits can provide benefits while you are still living. These can help with medical bills, living expenses, tuition costs, or whatever you want.

There are three different types of Living Benefits:

  • Terminal Illness

  • Chronic Illness

  • Critical Illness

Those benefits are also listed in order of commonality amongst the different insurance companies.  

Terminal Illness Rider

Almost every insurance company has the Terminal Illness Rider clause in their policies. They all differ a little bit, but they all come down to the same thing. If you are diagnosed to pass away within 24 months (some are 12 months), then you can have access to a portion or all of your face amount. So if you have $500,000 of life insurance with the terminal illness rider and you are diagnosed with cancer, and it is determined by a doctor that you have six months to live, you can access that money while you are still alive to help carry the burden of your medical expenses or lack of income. You are basically just "accelerating" the benefit a little early.

Chronic Illness Rider

The Chronic Illness Rider is the second most common Living Benefit or Accelerated Benefit Rider (ABR). There are quite a few life insurance companies that have the Chronic Illness Rider (or something similar with a different name), BUT it is only on their permanent plans. This means it is only on the Universal Life or Whole Life plans. These companies do not have this type of ABR on their term policies.  

There are a few companies that have ABRs on TERM policies:

  • AIG (Corebridge Financial)

  • National Life (Life of the Southwest)

  • Assurity

Again, each company has its own version. This benefit is usually triggered when you can not do 2 out of the 6 Activities of Daily Living or ADLs. This is also one of the qualifiers for Long Term Care.  

The Activities of Daily Living are:

  • Eating

  • Dressing

  • Bathing

  • Continence

  • Walking

  • Transferring

If you can not do two of the six ADLs listed above, you would have access to your death benefit while you are still living!!

Critical Illness Rider

Only a small amount of insurance companies have the Critical Illness Rider, including:

  • AIG (Corebridge Financial)

  • National Life (Life of the Southwest)

  • Assuirty

  • ANICO (Only on permanent policies)

When you have a policy with all three Living Benefits, then you are fully protected!!

The Critical Illness Rider is a little different with each insurance company, but like the others, they all share a similar idea. The Critical Illness Rider covers you in case you are diagnosed with a specific illness or condition. These conditions differ by state, but here is a list that is pretty common amongst the four companies listed above.

The Critical Illness Rider can cover the following:

  • Major Heart Attack

  • Stroke

  • Invasive Cancer

  • End Stage Renal Failure

  • Paralysis

  • Blindness

  • Major Organ Transplant

  • Coma

  • Severe Burn

  • Other Qualifying Conditions

When you have a life insurance policy that has all three Accelerated Benefit Riders, you are covered in case of death, chronic, critical, or terminal illness!!

We all want to live a long normal happy life and die in our sleep when life ceases to be sweet. We want our days to be good while we are here and with our loved ones. However, sometimes our lives can be disrupted by unforeseen and unavoidable situations. The worst of these situations are major health events. Living Benefits can help smooth out that journey. 

Not all insurance policies have Living Benefits. If this is important to you, then an Aultium Insurance agent can help you qualify for these policies.

Policies with Living Benefits are Life Insurance Policies.

An Aultium agent can help you understand the different companies' differences and which is appropriate for your situation. Click below for a free quote or a free 10 Minute, No-Obligation Consultation with an agent to answer any questions you might have.

RH113022RP